Greece repays €2bn loan ahead of crunch bailout talks
Greece has repaid a €2bn loan from its European creditors ahead of a crunch meeting over the terms of its bailout.
The repayment is part of the €86bn bailout programme from the “troika” of creditors, the European Central Bank, the European Commission, and the International Monetary Fund (IMF).
Bailout administrator European Stability Mechanism (ESM) announced the payment on Monday morning as finance ministers for the Eurogroup travel to Brussels to assess the progress of the bailout before releasing the next tranche of assistance.
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Greece is threatened with default on debt repayments in the summer if it does not receive the next part of the bailout. Monday’s meeting had been expected to confirm the next step, but this has been thrown into doubt after a public spat between the IMF and other creditors.
Jeroen Dijsselbloem, president of the Eurogroup and Dutch finance minister, said they were prepared for “intense talks” in an effort “to clear the ground.”
While there is “no acute need for money” according to Dijsselbloem, further delays risk the talks becoming a political football in upcoming European election campaigns – including the Netherlands.
The IMF’s continued participation came under increased scrutiny after a leaked IMF report questioned the sustainability of the loans, labelling the enormous Greek debt – currently at 177 per cent of GDP – as potentially “explosive”.
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The IMF wants the debt to be restructured as well as a looser target for government spending. The Greek government must currently run a surplus of 3.5 per cent, rather than the 1.5 per cent the IMF now demands.
The IMF is “very willing to participate with the programme”, said Dijsselbloem.
Germany has previously said it would not take part in any bailout without the IMF’s participation.
Klaus Regling, ESM managing director, said: “The prompt payment shows Greece is a reliable contract partner. It is a sign that the restructuring of the Greek banking sector is progressing well. We will continue to work together with Greece during the remainder of the programme.”
Regling earlier told German newspaper Bild he expects Greece to use “far less” than the full bailout amount by the end of the agreed period.